MTHEL131 Study Guide - Final Guide: Manulife, Life Insurance, Reinsurance
20 Jan 2020
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Only for whole life policies with csv. Bob (30 m, non smoker), has a 500,000 w/e. His premiums are due but bank is closed or another reason he cannot pay, non-forfeiture options prevent bob from leaving his policy. 3 options: automatic premium loan (apl) if after grace period, he did not pay his premium, he will be given a (loan, with interest) of that premium to continually pay for the policy. The loan will keep going until either bob starts paying the loan again or the loan + interest goes over his csv. If bob died the insurer can deduct the loan and interest from his death benefit: reduced paid-up (rpu): if someone with a w/l policy wants to stop paying the premiums due to wanting to retire or something. They can choose rpu to reduce the coverage amount of their policy but will no longer need to pay premiums another.
